M.D. gets look at AUC changes

Posted on February 28, 2019 by Vauxhall Advance

By Cole Parkinson
Vauxhall Advance
cparkinson@tabertimes.com

In an effort to keep municipalities aware of changes within the Alberta Utilities Commission, EQUS was in Municipal District of Taber council chambers.

During council’s regular meeting on Jan. 29, a delegation from EQUS presented to council some of their concerns with a new Alberta Utilities Commission (AUC) proceeding around annexation.

“As both EQUS and Fortis have distribution systems in the same service area, we are legislated to have an integrated operations agreement defining how we will manage intermingling systems. Prior to 2016, EQUS’ agreement with Fortis limited EQUS on the types of service that we could serve. However in 2016, EQUS was successful in removing membership criteria from its IOA (Integrated Operation Agreement) with Fortis and was able to serve any type of service within its service area,” said Andy Metzger, EQUS operations group leader. “It gave consumers choice on who their provider could be. Many Fortis users have exercised this choice and have chosen EQUS for their service and/or transfer their existing services to EQUS.”

With the application made in late 2016, annexations now present challenges to those within the affected area. Where those residents had a choice for their power provider, now the application could deny them that.

“Specifically, we felt it important to come talk to you about AUC Proceeding 22164 — Annexation. If an annexation of a nearby town within the county seeks to annex land which an REA (Renewable Energy Association) member has a service, those ratepayers will cease to have a choice in their electric distribution provider. The facts around this application, on Dec. 16, 2016, Fortis filed an application with the Alberta Utilities Commission. The application sought relief that would give it an exclusive right to serve in municipalities where it had signed municipal franchise agreements. Specifically, the commission was asked to confirm the current limits of Fortis’ service areas, alter those service areas where required to match the annexed land and transfer facilities where necessary,” explained Metzger.

Metzger explained the transfer wouldn’t be immediate unless some things were completed.

“The outcome of this proceeding, the AUC agreed with Fortis Alberta in part and altered the REA service areas that currently overlap with these municipal franchise agreements. Any of the members that were found in this area were expected to transfer their distribution over to Fortis. The AUC did not require immediate transfer of these existing REA facilities and members in the annexed formally overlapping areas, unless certain conditions were met or until a municipality that is bound by this MFA with Fortis Alberta passes a bylaw requiring the transfer.”

With this change potentially cutting into EQUS business, the company was hoping to inform municipalities of what the changes could mean for everyone involved.

“Our position on this outcome is, the AUC states the decision was made for public interest. EQUS’ position is that each of the AUC public interest groups contain legal errors. We have filed a statutory appeal with the Court of Appeal of Alberta and a review in the variance of application with AUC. Both the appeal and the review in the variance assert that the AUC error in failing to correctly consider the application of the Municipal Government Act to the decision. The AUC decided that in urban municipalities, cities, towns, villages and summer villages, existing REA members may continue to be served by that REA until the Urban Municipalities passes a bylaw requiring REA members to switch to Fortis Alberta. If no bylaw is passed, the REA may continue to serve an existing REA member in the municipality boundaries,” continued Metzger. “It really does boil down to choice for your current ratepayers. If they are in an area where they may be faced with annexation, these municipal franchise agreements state that they will become a Fortis customer as opposed to an EQUS member, therefore not having a choice in their distribution rates. We are asking if you are aware of this in the event there is annexation of lands and may be faced with concerns from REA members when they are being asked to switch over to Fortis.”

Another big concern from EQUS’ point of view comes from the fact Fortis would reap the benefits from the annexation without doing any of the prior leg work.

“When Fortis takes over an REA, Fortis investors can acquire those customers without actually investing a dollar. The costs get passed right back to customers because Fortis is guaranteed a rate of return on its capital costs. This gives Fortis a strong incentive to buy the REA and be fiercely aggressive when they do it. What we are finding is, this really is limiting choice within Alberta when it comes to distribution,” stated Metzger.

Coun. John Turcato questioned if money was given back to REA for the existing infrastructure that was already in place.

“There is a consideration for the value of the distribution system through the proceedings. So there is a consideration for the cost to the REA,” answered Metzger.